Price, value of ag exports

Exports are a big deal for agriculture, always have been and always will be. Of course, the mix of agricultural exports has changed over time. Tobacco exports back to the mother country have been replaced with worldwide exports of grains, oilseeds, livestock products and a host of other foods, some sent raw or in bulk, others highly processed.

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By Darryl E. Ray and Harwood Schaffer, Agweek

Exports are a big deal for agriculture, always have been and always will be. Of course, the mix of agricultural exports has changed over time. Tobacco exports back to the mother country have been replaced with worldwide exports of grains, oilseeds, livestock products and a host of other foods, some sent raw or in bulk, others highly processed.

Recent years have been particularly good for agricultural exports. The U.S. set a new record of $140.9 billion in fiscal year 2013. Agriculture Secretary Tom Vilsack commented, “The period 2009 to 2013 stands as the strongest five-year period for agricultural exports in our nation’s history.”

Last fall, he encouraged Congress to pass a farm bill, partly as a means to keep up the “incredible momentum” of agriculture exports by continuing to fund trade promotions programs. The Agriculture Act of 2014 came through with funding for the Market Access Program. The farm bill also creates an undersecretary of agriculture for trade and foreign agriculture. Clearly, Congress and the Obama administration are fans of agricultural exports and are planning for continued growth in the value of agricultural exports.

The question is: Will the value of agricultural exports during the 2014 farm bill experience the remarkable growth that was chalked up during the tenure of the 2008 farm bill?

Besides the ethanol phenomenon, the most striking thing that happened to crop agriculture in the past five years was crop prices rose to levels that few thought were even remotely possible.

Were those mammoth crop price increases largely responsible for growth in the value agricultural exports? In the case of grains (primarily corn and wheat) and soybeans, the answer is definitely yes.

The volume of corn, soybeans and wheat exports were somewhat variable but relatively flat. On the other hand, the value of exports has exploded since the mid-2000s, as has the price per metric ton. The price and value of exports move together with few exceptions.

Corn and soybeans are the top two contributors to the total value of agricultural exports. Clearly, their export values in the years ahead will be highly influenced by their prices.

History tells us that multi-year periods of exceptionally high crop prices are usually followed by much longer periods of exceptionally low crop prices. If that is the case, secretaries of agriculture in future years might be explaining dramatic drops in the value of agricultural exports.

Of course, the similarity of trends in export values and prices for other categories of agricultural exports — especially the growing volume of highly processed exports — are not universally as strong as the trends in crop export value and crop price.

Still, it seems most likely that over the period of the next farm bill, the overall trend in the value of agricultural exports will point in the same direction as the overall trend in crop prices.

Editor’s note: Ray is the director of the Agricultural Policy Analysis Center at the University of Tennessee. Schaffer is a research assistant professor at APAC.